June 25, 2019

AVB – Market expectations are for Uniform ROA expansion, but management has concerns about property development, growth, and write-offs


  • AvalonBay Communities, Inc. (AVB:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 46.2x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their Southern Florida and Denver property developments, NAV growth, and retail tenant write-offs
  • Specifically, management may be concerned about their Southern Florida and Denver property developments, Los Angeles rent caps, and a slowdown in Southern California assets. Furthermore, they may lack confidence in their ability to generate meaningful NAV growth, increase returns on external investments, and maintain cost savings from online property tours. Finally, they may be concerned about their regional US growth, retail tenant write-offs, and their ability to respond to changing market conditions.
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